GuideStar Blog

Trust-Based Grantmaking: What It Is, and Why It’s Critical to Our Sector

Trust-Based Grantmaking: What It Is, and Why It’s Critical to Our SectorThe Walking Dead is back on TV. After last season’s finale, and this season’s opener, I am not sure I will continue watching. But zombies do make me think of funding dynamics, so that’s why I am bringing it up. In The Walking Dead, the zombies are scary, but they are the least dangerous. Zombies eat brains; they don’t have brains; they don’t have hidden motives and plans; you know exactly what a zombie will do. It’s the humans who are terrifying. Pushed into survival mode, they calculate, lie, betray, and refuse to use the Oxford Comma (#OxfordCommaForever). No one trusts anyone, and it’s more often than not that groups of humans end up killing one another before a zombie actually gets to munch on anyone’s flesh.

What does this have to do with funding dynamics? Well, there seems to be a pervasive lack of starting with trust between funders and nonprofits, and it’s affecting all of us and our abilities to survive and do our work. The default starting relationship between funders and nonprofits is one of suspicion of the latter by the former, which leads to funders enacting policies and practices designed to make nonprofits more “accountable,” such as restricted funding, individualized applications, bespoke budget forms, customized reports, and other things that drive us nonprofits nuts. This in turns leads to nonprofits’ hiding of information, especially about challenges, from funders, which in turn reinforces the suspicion. All this perpetuates a depressing cycle of waste of time and energy and lots of complaining, usually at bars, and all that could have been used to deliver programs and services.

This is why it’s been inspiring to learn of The Whitman Institute (TWI)’s philosophy of “Trust-Based Grantmaking” (TBG). I am highlighting it here, because I will be discussing effective funding practices more often on this blog, and I think TWI’s work yields some critical lessons for our sector. Disclosure, my organization is now a grantee of The Whitman Institute.  

(By the way, this post may be long, so I’m inserting pictures of little ducklings and goslings, to keep you reading).

Trust-Based Grantmaking: What It Is, and Why It’s Critical to Our SectorThe concept is simple: Funders and nonprofits are most effective when the relationship starts with trust, not suspicion. The default right now, as I mentioned, is one of mistrust: Is this organization legit? Do they have their 501c3? Are their staff even qualified? Will they spend my money properly? Will they do what they say they will do? Do they even know what they’re doing? Will they embarrass my foundation? All these concerns are often unconscious, and are very similar to the concerns society has about poor people. They lead to the ineffective and frustrating practices that on a daily basis make nonprofit professionals want to abandon civilization to live in a van by a river.

Trust-Based Grantmaking starts with these questions instead: What is this leader’s story and purpose?  What’s the organization’s intent? Are dialogue and relationship key strategies to advance this intent?  What is the approach? What roles does it play in the sector? How can my foundation be most useful to it? What can I and my foundation do to free up this organization’s time so it can focus on its work? How can we maintain a trusting and mutually-beneficial partnership? How do we support the amazing staff so they don’t burn out? What lessons can we glean through this relationship?

Trust-Based Grantmaking: What It Is, and Why It’s Critical to Our SectorThis philosophy is what The Whitman Institute has adopted, and it shows in TWI’s 9 Key Practices of Trust-Based Investment, which include:

  • Provide unrestricted, multi-year funding
  • Do the homework
  • Partner in a spirit of service
  • Offer open and responsive communication
  • Solicit and act on feedback
  • Encourage transparency
  • Simplify and streamline paperwork
  • Support beyond the check
  • Host restorative retreats
  • Have quarterly karaoke between foundation and grantees (OK, this is not one of the Key Practices of the Whitman Institute, but I thought I would throw it in)

The Whitman Institute elaborates on each of these practices on their website. I am writing from a grantee’s perspective on why it is important for funders start with trust:

It saves us a ton of time: Trust-Based Investment saves everyone so much time, time that we can use to implement programs. Especially multi-year, general operating funds. Let’s face it, the fact that so many funders still refuse to give general-operating funding is due to the fact that they deep down don’t trust nonprofits. Many funders are still in this mindset that nonprofits are like contractors hired to fix the plumbing, who are followed around to make sure they don’t steal stuff in the house. This is why so many grants are restricted. There is a lack of trust that nonprofits won’t use the money unwisely, leading to aggravating funding restrictions. I’ve written plenty on this topic (see “Ordering a cake and restricting it too” and “The myth of double-dipping, and the destructiveness of restricted funding”)

But this lack of trust results in hundreds of thousands of wasted hours trying to prove that we are trustworthy, versus doing our jobs, which is what everyone wants. Fixing the leaky pipes of society is complex and time-consuming enough without us spending all this time proving that we can be trusted. Yes, there are irresponsible, untrustworthy nonprofits out there, but acting as if they are the default in our sector does a huge disservice to our community.

Trust-Based Grantmaking: What It Is, and Why It’s Critical to Our SectorMeanwhile, streamlined paperwork: I nearly wept upon learning that TWI encourages the acceptance of “proposals and reports crafted for other funders.” I know, some funders have been pushing for years for the acceptance of a common application. Many of us in the sector would love to see that. If we can just write a single comprehensive application and just submit that to all funders, imagine the time and energy we could save. I don’t know why that has not caught on in many places, but individual funders who adopt the Trust-Based model can simply trust that what nonprofits propose to another foundation will remain true. Reports too. Just think of all the time saved being put to good use advancing program goals.

One funder, inspired by TWI’s approach, told me “Send me any proposal you submitted to another foundation. Don’t even worry about changing the name of the other foundation. Just forward me what you emailed them, if you’re happy with it.” The program officer’s thoughtfulness freed up 10 or 15 hours of my time that I could use to focus on programs. The blank stare I gave him covered for the Foreigner song that played in my head: “I’ve been waiting, for a funder like you to come into my life. Yeaaaah, waittting, for someone who, can make me feel all right…” (That was before Foreigner changed their lyrics).

It makes us more honest: In my years in nonprofits, I’ve worked with many program officers. Most are incredibly nice people. Some have become friends and mentors who are instrumental to my work and personal and professional development. Many, through an encouraging word or action, have prevented me from quitting the sector in rage or stress. I remember one time, my program director and I were demoralized from the sudden low-attendance at our after-school youth program designed to help kids who just arrived to the US. It was sunny, and only 16 kids attended, when we normally had twice that many. Feeling like a failure, I called a program officer whose organization funded our program. Because our relationship was built on trust and genuine partnership, I was able to be honest when challenges arose. It allowed for better problem-solving and creative collaborations.

Unfortunately, despite the many amazing program officers in the sector, the relationship we have between funders and nonprofits is one marked by a severe power differential reinforced by mistrust. As I mentioned, this leads to fear, suspicion, and oftentimes, the obfuscation of information, especially around challenges. These things paralyze many of us from being able to effectively tackle our work. We can only address entrenched society problems by building stronger relationships between nonprofits and funders. And we can only build strong relationships by being honest with one another. And it is much easier to be honest if there is trust.

It strengthens partnerships: I appreciate the Whitman Institute’s philosophy of partnering in the spirit of service. Which means practices we traditionally take for granted have to be reexamined. For instance: Whenever we nonprofits meet with a funder, we have likely spent some time researching the foundation’s priorities, giving history, values, etc. We peruse annual reports, white papers, tweets, blog posts. Sometimes we stalk program officers on LinkedIn. We ask board members if they know staff who work at this foundation. Some of us consult a psychic medium to determine the best time to ask for a meeting.

Funders are not expected to do the same amount of research on potential grantees. Which is why it was shocking when I had my first call with the The Whitman Institute and they already knew my organization’s history, mission, values. They call it “Doing the Homework.” They scanned our evaluation map and read our 36-page formative assessment report, which highlights the stuff we did well and all the things we suck at. I got slightly freaked out that they knew so much and ask such pointed and incisive questions. But then, it made me feel really acknowledged, like our work matters (because it does). Even if we didn’t get the funding, it was just refreshing to be treated like a potential partner, and not just another needy nonprofit asking for money.

Trust-Based Grantmaking: What It Is, and Why It’s Critical to Our SectorIt improves morale: Nothing destroys morale faster or more assuredly than feeling like people you work with don’t trust you, that you must constantly work to earn their trust, and that even this tentative level of faith in you is ephemeral and could disappear at the slightest mistake. It does not feel like an actual partnership. It feels more like a boss-employee relationship, with a boss who is constantly on alert.

Imagine if you are hired on to a new job. Now imagine that the boss is paranoid that employees will steal office supplies and won’t be on task. So at the beginning of each day, everyone must record exactly how many staples, pens, and paperclips they plan to use and exactly what tasks they will do and what they will accomplish. At the end of each day, they must do inventory and return all the supplies they didn’t use to the supply room and report on the status of each task and how much time was spent on it. Randomly, there are physical searches to make sure no one is stealing, and the boss hovers behind people throughout the day to make sure no one is slacking.

That would be a horrifying and demoralizing place to work, right? Unfortunately, this is what it feels like to many of us nonprofits in many of our funding relationships. Starting any relationship on trust reverses this. It increases morale. Considering the burn-out rate in this sector, morale is critical. 

It makes us more effective: One thing funders and nonprofits have in common is both want nonprofits to be effective at carrying out our missions. And yet so many practices—restricted funding, a cap on overhead, endless customized budgets and paperwork—directly prevent us from reaching this goal. If starting with suspicion instead of trust actually results in many of us being better at reaching outcomes for our community members, then by all means, let’s continue doing that.

But that’s not what’s happening. The opposite is true—funders’ not starting with trust hurts our community. It burns people out. It wastes time and energy. It distracts from the actual, highly complex work. Starting the funding relationship on trust saves time, increases transparency, strengthens collaborations, and improves morale. All of these things lead to nonprofits being better at their work, at reaching outcomes.

***

Trust-Based Grantmaking: What It Is, and Why It’s Critical to Our SectorIn order to advance the work of the nonprofit sector, funders and donors must move toward starting every relationship on trust and act accordingly. Yes, there are bad apples. But the bad-apple method of determining policies does not work, in funding or in the workplace or anywhere, and is often devastating to morale and effectiveness. When we punish 95% of the people for the sins of the 5% who are a-holes, we are likely going to demoralize everyone and probably turn a few good people themselves into a-holes (which furthers justifies our policies, leading to a vicious cycle of a-holism). Honestly, I think the solution is simple: If you don’t trust a nonprofit, don’t fund it. Just like if you think an employee will steal or embezzle from you, don’t hire them. 

I am glad to see funders like The Whitman Institute challenge traditional funding practices. Please read TWI’s Co-Director Pia Infante’s blog post from the funder’s perspective on why Trust-Based Grantmaking matters. It gives me hope also that other funders are also inspired to base their grants on trust. The Robert Sterling Clark Foundation is also using Trust-Based Grantmaking. The Peery Foundation has developed a model called Grantee-Centric Grantmaking.

All these practices are awesome and great signs that the wall of ice between funders and nonprofits is melting, and that we are moving toward an era where funders and nonprofits are equal partners working to solve society’s most pressing problems. It’s great. Because we and our community are running out of time. We need to start with trust. Otherwise, we are all going to get devoured by zombies. Foreigner would probably say it’s urgent.

Let me know your thoughts.

(Although, if you are going to say that this is why we need to give up grants and focus on individual donors, please read “Why individual donations strategies often don’t work for communities of color.” And if you are going to say that funders and donors are giving us nonprofits their hard-earned money and so we should be grateful and fall in line, please read “So you don’t think you directly benefit from nonprofits.”)

Vu LeThe GuideStar Blog welcomes Vu Le as a monthly contributor for his column, Point of Vu. The preceding is a cross-post of an October 24, 2016, article from his blog, Nonprofit with Balls. Vu Le is a writer, speaker, vegan, Pisces, and the executive director of Rainier Valley Corps, a nonprofit in Seattle with the mission of developing and supporting leaders of color to strengthen the capacity of communities-of-color-led nonprofits and foster collaboration between diverse communities to effect systemic change.

Topics: Fundraising Grantmaking